Booker and Makro’s dominance in catering was one of the main reasons why the £140m deal was referred to the Competition Commission, the Office of Fair Trading has revealed.
The watchdog’s full text of its decision to refer Booker’s acquisition of Makro, published last week, revealed that as well as competition concerns in 13 local areas, the OFT was also concerned Booker buying Makro could result in “a substantial lessening of competition for caterer customers at a national level”.
It found that Booker and Makro would have an estimated combined share of supply to caterers of 50% to 60% nationally. And it said a number of catering customers had raised concerns about the merger.
The OFT also reasoned that rival cash & carry operators Bestway and Costco were “significantly weaker in the wholesale supply to caterers”, so would not provide enough competition for a combined Booker/Makro.
The document also revealed the locations of the 13 local areas it was concerned competition could be weakened by the merger, including Bristol, Exeter, Hull and Ipswich. The OFT said it was also concerned about competition in a further nine areas, but concluded there was “a number of factors which generate uncertainty in coming to a view”.
Booker and Makro were unable to persuade the OFT that competition would be unaffected in the 13 areas, despite carrying out a survey on nearly 4,000 customers, the OFT said. And it was concerned that where a Makro depot had more than one Booker nearby, the survey was only carried out at the closest Booker and not all of them.
“We were disappointed the merger was referred to the Competition Commission,” a Booker spokeswoman said. “As the OFT itself acknowledged, it has adopted a cautious approach. The Competition Commission is now taking a fresh look at this transaction and has more time and greater resource than the OFT to do so.”